North Sea Brent, the European benchmark for oil, dropped almost 35 per cent over the year, while the US benchmark West Texas Intermediate (WTI) fell 30 percent.

"With Brent crude oil hovering near 11-year lows and WTI not faring all that much better, the markets are ending the year on a somber note, consistent with what we see as ongoing physical oversupply," said Tim Evans of Citi Futures.

The key futures contracts finished Thursday with modest daily gains. WTI for delivery in February rose 44 cents to close at US$37.04 on the New York Mercantile Exchange.

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The modest rebound Thursday may stem from investors trying to minimise risks after betting on prices to fall ahead of the long New Year's weekend, said Andy Lipow of Lipow Oil Associates. Markets are closed Friday.

"It could be simply end-of-year short-covering because the market has been so bearish," he said, "and people squaring their positions."

Crude futures have dived from more than US$100 a barrel in mid-2014 as abundant supplies were exacerbated by strong output by Opec and the United States.

Prices have particularly slumped since December 4 when the Organisation of the Petroleum Exporting Countries decided against limiting production as members fight to keep market share.

Also weighing on market sentiment was China as growth slowed in the economy of the world's largest energy consumer. And Opec member Iran was poised to boost crude exports after sanctions are lifted, part of its landmark nuclear agreement with major powers.

"We know the market is oversupplied and as we go into 2016 the market will await the return of Iranian oil," Mr Lipow said.

Potentially adding to the supply worries was action by the US Congress earlier this month to end the 40-year-old US ban on exports of crude oil producted in the country.

NuStar Energy and ConocoPhillips announced on Wednesday they were loading "what they believe to be the nation's first export cargo of US-produced light crude oil" since the ban was lifted.